Insider Tips - Weekly Stock Market Report - Week April 2, 2024

Weekly Stock Market Update:

Welcome to another weekly stock market report. For this week ending March 28th, short week this week due to Easter, and the market is still GREEN. Tune-in for a full report of your favorite top stocks and let me share my insight into the market this week. Thanks for being here.

Market Updates - In Recent News:

In a recent update, Federal Reserve Chair Jerome Powell expressed a cautiously optimistic view on the latest inflation figures, indicating that they align somewhat with the Federal Reserve's expectations. Speaking at a San Francisco Federal Reserve conference, Powell described the path to achieving the central bank's inflation target of 2% as "bumpy," emphasizing that the journey is not straightforward. This commentary followed the release of new data showing a modest improvement in the Personal Consumption Expenditures (PCE) index, the Fed's preferred measure of inflation.

For February, the core PCE index, which excludes the often-volatile food and energy sectors, increased by 2.8% year-over-year, a slight decrease from January's 2.9%. Month-to-month, core prices rose by 0.3% from January to February, signaling a deceleration from the 0.5% increase seen the previous month. These figures were anticipated by economists and suggest a gradual cooling of inflation, although not as pronounced as the more significant drops observed in the latter half of the previous year.

Powell underscored the importance of not reacting prematurely to these fluctuations in inflation data, advocating for a balanced approach in monetary policy decisions. The Federal Reserve aims to avoid both the risks of cutting interest rates too soon, which could lead to a resurgence in inflation, and the dangers of delaying rate cuts, which might harm the economy unnecessarily. Powell's comments reflect a strategy of patience, waiting for more conclusive evidence that inflation is steadily returning to the 2% target before making significant policy adjustments.

Despite the ongoing challenges of managing inflation, Powell highlighted the strength of the job market and overall economy, suggesting that there is no immediate need to reduce interest rates. This stance is consistent with the decisions made during the last Federal Reserve policy meeting, where officials chose to maintain the current interest rate level while projecting three rate cuts for the year. They also revised their expectations for both inflation and economic growth upwards.

Market reactions to Powell's remarks have been mixed, with investors estimating a more than 60% likelihood that the Fed will start lowering rates by June. These speculations came ahead of the Good Friday holiday when markets were closed.

Other Federal Reserve officials have also voiced their perspectives, advocating for a cautious approach to adjusting monetary policy. Fed Governor Chris Waller emphasized the necessity of observing several months of favorable data before considering a policy rate cut, indicating a need for certainty that such actions would support the continued reduction of inflation to the 2% goal. Similarly, Atlanta Fed President Raphael Bostic has adjusted his expectations, now foreseeing only one rate cut this year, anticipated to occur later than previously thought.

These collective insights from Federal Reserve officials, including Powell's latest comments, underscore a unified cautionary stance on interest rate adjustments. The central bank's priority remains firmly on steering inflation back to its target level, necessitating a careful balance between encouraging economic growth and preventing inflationary pressures from regaining momentum. Inflation does seem like it is here to stay and the Fed has ultimately backed itself into a corner by raising interest rates, the same rates that it must "charge itself" to provide more money to the Federal Government as they continue to spend more and more money. Money printing is here to stay, despite what the Fed says, and that is ultimately inflationary.